Live Well Financial CEO Used Lenders ‘Like an ATM’ U.S. Says

The chief executive officer of defunct reverse mortgage provider Live Well Financial Inc. used lenders “like an ATM,” enriching himself by borrowing against bonds whose value he conspired to inflate by more than $200 million, prosecutors said at the start of Michael C. Hild’s fraud trial.

Hild, 46, schemed with other Live Well executives to increase the reported value of a pool of bonds used as collateral for loans, Assistant U.S. Attorney Jordan Estes told jurors in opening statements on Wednesday. The testimony of those executives will be part of the government’s case against Hild, Estes said, in addition to recorded phone calls and emails.

According to prosecutors, Richmond, Virginia-based Live Well generated more than $100 million in revenue during the course of the alleged scheme that began in September 2015 and fell apart in May 2019, when Live Well wrote down the value of the bond portfolio by $141 million and announced it would cease operations. Hild received $24 million in compensation during that time, the government says.

Three of Live Well’s lenders forced the firm into liquidation in June 2019. The lenders claimed to have lost more than $130 million.

Hild has pleaded not guilty to charges of conspiracy, securities fraud, wire fraud and bank fraud. The most serious charges carry a maximum of 30 years in prison, though he would probably be sentenced to much less if convicted.

Hild has claimed he is being prosecuted for the company’s failure. His lawyer told jurors on Wednesday that they should focus on the issue of his client’s intent and find him not guilty.

“Did Mr. Hild have good intent -- was he acting in good faith?” the lawyer, Ben Dusing asked. “Or, on the other hand, did he try to defraud people?”

‘Scenario 14’

Former Live Well Chief Financial Officer Eric Rohr and former head trader Darren Stumberger have pleaded guilty and are cooperating in hopes of receiving more lenient sentences. Stumberger, the first prosecution witness, began his testimony on Wednesday after opening statements.

Stumberger told jurors about “Scenario 14,” which he said was the internal name for a practice of giving inflated bond values to a third-party valuation firm that was supposed to be independent. Hild called the system a “self-generating money machine,” Stumberger said, since the higher valuations allowed the company to borrow more money from lenders.

The case is U.S. v. Hild, 19-cr-00602, U.S. District Court, Southern District of New York (Manhattan).

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